The European Central Bank today rejected calls for a cut in interest rates to help reverse an economic slowdown across Europe.
The best remedy for lumbering growth and mass unemployment, which has angered voters prompting a resounding No to the EU constitution, is for the central bank to deliver low inflation, ECB President Jean-Claude Trichet said.
He was speaking at a news conference after the bank kept interest rates unchanged at 2 per cent at its monthly rate-setting meeting.
Low inflation alone will inspire confidence in the European monetary union, while politicians must help on the growth front by reforming their slow-growing economies, he said.
"If I was preparing for a rate cut, I would tell you," Mr Trichet said. "I am not telling you anything that could be interpreted as preparing a rate cut."
"We unanimously think that the present interest rates are appropriate and that if we would move them we would not augment, if I may, our faithfulness to our (price stability) mandate."
Trichet said that the "No" votes by The Netherlands and France to the EU constitution only hardened the central bank's resolve to guarantee stable prices and a credible currency.
"It reinforced our sentiment of responsibility. Improving confidence is really of the essence and it is what we try to do in the present circumstances, which are exceptional," he said.
Moreover, if inflationary risks mount the ECB stands ready to raise interest rates when necessary, he said.